Industrial metals such as copper, aluminum and nickel are struggling with disappointing economic activity that weighs on demand, on the one hand, and the energy transition, which is boosting demand in certain sectors, on the other.
While demand for metals in traditional industrial sectors has weakened, decarbonization efforts by governments around the world are increasing the need for metals that are key to renewable energy-related manufacturing, from electric vehicles to solar panels.
Metals, including lithium, nickel and cobalt, give electric vehicle batteries the ability to store and release energy. Meanwhile, copper is essential in all aspects of the energy transition, from electric vehicles to charging infrastructure and solar photovoltaics (PV).
In the case of aluminum, the biggest growth in terms of demand will come from the transportation sector amid the shift to electric vehicles.
Global sales of electric vehicles surpassed 10 million last year alone. and this level of growth is not expected to slow down in the short termand almost one in five new cars sold worldwide this year will be electric.
And as demand for electric vehicles increases rapidly, so does demand for metals within their batteries.
If we see governments introduce even stronger policies to fight climate change, this will lead to even faster adoption of electric vehicles and related green energy infrastructure, which will, in turn, increase the need for metals. green.
We expect green energy to boost metals like aluminum and copper in the long term, and its role in the energy transition to be attractive to investors, but in the short term we don’t think it will be enough to drive up prices.
Meanwhile, the growing focus on decarbonization in the metals industry is likely to increase further with the implementation of the European Carbon Border Adjustment Mechanism (CBAM) transition phase that begins this month.
